Buhari legacy

Rising rig activity signals Nigeria’s return to oil producer big leagues

Nigeria’s oil rig count rose 85 percent within the last six months to its highest level since January 2020, according to new data from the Organization of the Petroleum Exporting Countries (OPEC), signaling that Africa’s biggest oil producer is no longer going to be playing on the margins.

The upsurge in rig activity has translated to bigger oil production. Nigeria’s oil production increased by 23,000 barrels per day (bpd) to 1.258 million bpd in January and increased by 48,000bpd to 1.3 million bpd in February, according to OPEC data. This does not include condensate production, which when included puts the figure closer to 1.6 million bpd.

The production increase of 48,000bpd recorded last month was the highest by any member in the oil cartel, accounting for nearly half of OPEC’s total production increase.

However, the challenge remains sustaining the momentum and translating rising production into value for millions of Nigerians who live in dire poverty while at the same time maintaining a $10 billion yearly petrol subsidy bill.

The oil industry measures the level of exploration, development, and production activities in a country’s oil sector by the number of active drilling rigs. Nigeria’s oil rig count averaged around seven in September, when oil thieves were ambushing every pipeline heading to an export facility. Producers shut down drilling rigs and oil wells.

Uwaye Omijie, a petroleum production engineer at Midstream Oil & Gas Company, Delta State, said producers hoping to leverage high oil prices are driving production activities.

“Oil prices are currently about $75 per barrel, so producing companies have gained more from crude oil sales. They also need to keep up in producing more crude for exports and more gains,” he said.

Industry operators say the prospects for sustaining production are bright. The regulator, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), has offered seven offshore blocks to investors to deepen exploration in deepwater fields.

According to a statement by Energy Connects, Nigeria’s offshore industry will also maintain the momentum of drilling activity it saw in 2022, with five offshore rigs scheduled to be active in the country this year.

The statement said both Shell and First E&P will complete their respective campaigns on Bonga (deep water, OML 118) and Madu (shallow water, OML 85), but new programmes are also on the table.

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It said: “General Hydrocarbons has notably contracted the Blackford Dolphin for a drilling campaign at Oyo on OML 120, a shallow water field it hopes to redevelop and return to production quickly.

“Also in shallow water, the Chevron Nigeria JV is seeking a rig to execute a two-year campaign offshore Escravos starting mid-2023. More importantly, deep-water drilling is also on the table for TotalEnergies, with the major expected to execute an infill drilling campaign on its Egina and Akpo hubs on OML 130. However, the rig is yet to be announced.”

“We are witnessing an upsurge in drilling activity offshore Nigeria since 2022 that we see continuing well into 2023,” Ibrahim Bello, managing director of Caverton Helicopters, a provider of offshore logistics services, was quoted as saying in the statement.

“Based on the current appetite from shallow water and deep-water operators, we expect more drilling campaigns to be announced this year.”